An Evaluation of Budgetary Subsidies in Goa

Subsidy is an important fiscal instrument used by both Central and State Governments in India to reduce social and economic inequality. This paper analyses subsidies in the budget of Government of Goa during 2002–03 and 2006–07. The methodology is based on a discussion paper evolved by the National Institute of Public Finance and Policy(NIPFP), New Delhi for the Indian Parliament in 2007 and subsequent studies by NIPFP(2001) and Srivastava D.K. and Others(2003). The components of cost and subsidy under different services during 2002–03 and 2006–07 reveals that under Merit services the development priority of the State was mainly on Education. Under Non-Merit services category, development priority comprised power, roads and bridges, irrigation, water supply and sanitation, medical and public health and agriculture and allied services. From 2002–03 to 2006–07, the recovery rate both under Social Services and Economic Services had declined. Per capita subsidy under Social Services was much higher than the Economic Services. At constant prices, the growth in subsidies from 2002–03 to 2006–07 was very high under non-merit category of Economic Services, which necessitates revision of user charges. A significant finding is the excellent performance of power sector in recovering its cost fully, while most of the State Public Sector Enterprises(SPSE) in power sector are in severe loss. From 2002–03 to 2006–07, the growth in subsidy was higher than the growth in revenue receipts. However, during the same period the growth in subsidy and Gross State Domestic Product has more or less remained at same level.